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Judge grants Coakley’s request for delay in Partners antitrust settlement

Criticism of Attorney General Martha Coakley’s antitrust pact with the state’s largest health care system mounted Thursday as a watchdog panel warned a judge the proposed deal might not meet its goal of holding down medical expenses.

But Coakley, a Democratic candidate for governor, signaled she was prepared to toughen the terms of her settlement with Partners HealthCare System. To allow more time to supplement the agreement with findings by the state Health Policy Commission that Partners’ takeover of Hallmark Health could drive up costs, Coakley sought to have a scheduled Aug. 5 hearing on the deal postponed. Suffolk Superior Court Judge Janet L. Sanders agreed and set it for Sept. 29.

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Sanders, who will decide whether to approve the antitrust settlement, also extended a public comment period to Sept. 15 and gave Coakley until Sept. 25 to respond to the comments.

Meanwhile, two of Coakley’s rivals spoke out against the settlement, which ended five years of investigation by the attorney general and the US Department of Justice into alleged anticompetitive practices by Partners. The pact would allow Partners to acquire Hallmark hospitals in Medford and Melrose and South Shore Hospital in Weymouth but sets limits on price increases and further expansion for five to 10 years.

State Treasurer and candidate Steve Grossman, who earlier called the Partners settlement a “common-sense solution,” Thursday said he now believes it “does not serve the best interests of the people of Massachusetts.” Another candidate for governor, Don Berwick, a former Centers for Medicare and Medicaid Services administrator, circulated an online petition seeking to block the deal. He said he planned to deliver the petition to the attorney general’s office, and ultimately to the judge, when he has 2,000 signatures.

In a statement, Coakley spokesman Brad Puffer defended the Partners pact.

“The proposed consent judgment will help control health costs and alter Partners’ business practices for the next 10 years, accomplishing more than a lawsuit would have done,” it said. “Our office always retained the option to seek to renegotiate portions of this agreement as it relates to Hallmark following a final report by the Health Policy Commission.”

But the commission’s comments submitted to Sanders went beyond its previous warnings that the hospital takeovers would boost costs. It warned about the effectiveness of Coakley’s proposed price caps more generally and said their approach of holding cost increases to the level of general inflation was “inconsistent” with assertions by Partners and its proposed merger partners that their alliances would lower spending by promoting better coordinated care.

“Without lasting changes to the market structures and incentives that underlie the operation of bargaining leverage [by Partners], price caps on their own may not be effective in keeping costs down,” the commission said. It also questioned the effectiveness of proposed “component contracting” that would let health insurers bargain separately with Partners’ teaching hospitals — such as Massachusetts General and Brigham and Women’s — and its community hospitals.

The commission, created by a 2012 state law to monitor health care spending, projected the South Shore and Hallmark transactions alone will boost health care spending in the region by $38.5 million to $49 million a year by the state’s three largest health insurers.

But while expressing skepticism about the settlement, the commission did not explicitly oppose it. “We raised some detailed concerns,” commission chairman Stuart H. Altman said. Taking a formal stand would “go beyond our legal authority,” he said.

Commission member Paul Hattis said he was heartened by Sanders’s decision to seek public comments before ruling on the deal. He expressed hope that the comments, including those from the commission, might prompt Coakley to not only amend the terms of the deal relating to Hallmark but to toughen the restrictions on Partners’ market power more broadly.

Puffer said he could not respond immediately to the points raised in the commission’s comments or say whether the attorney general might seek broader changes in the pact.

Before it reopens negotiations with Partners, the attorney general’s office will await the final report from the commission, due the first week of September, on the effects of the Hallmark takeover. In a preliminary report released July 2, the commission warned Partners’ planned acquisition of Melrose-based Hallmark would raise health care spending by $15 million to $23 million a year by major health insurers and drive up employer and consumer premiums.

Some Partners competitors have been fighting the acquisitions, arguing the settlement is too weak. Beth Israel Deaconess Medical Center, Lahey Health, Tufts Medical Center, and Atrius Health, among others, say it will allow Partners — already a high-cost health system — to push prices even higher.

“It is critical that the concerns voiced by the [commission] today and the serious issues raised by its market impact review and cost trend reports be addressed,” the competing health care groups said in a statement Thursday.

Partners did not object to Coakley’s request to postpone the court hearing and the final decision on the antitrust settlement. “We have supported a public and transparent process since we began our [merger] review with the state two and a half years ago,” Partners vice president Rich Copp said.

Akilah Johnson of the Globe staff contributed to this report. Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.
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